The Central Bank Rate (CBR) has been retained at 10 percent by the Central Bank of Kenya in a statement issued during the bi monthly rate setting meeting on Monday.
Economic analysts had foreseen the possibility of the CBR being changed but the Central Bank said that it had to retain the CBR at 10 percent as it monitors closely the impact of the interest rates capping law. The CBK has said that there is need to evaluate the interest capping law even as some of the commercial banks that have released their 2016 financial results blame the law for reduced profits.
The interest rate capping law forced most commercial banks to move away from the issuance of personal loans for fear of running into losses and increasing the non-performing loans.
“While the growth of private sector credit has stabilized at 4.0 percent, the share of loans to corporates has increased relative to business and personal loans,” said Dr. Patrick Njoroge the CBK Governor.
This also comes amid rising inflation in the country which hit 9.04 percent during the month of February with indications pointing that the inflation for the month of March might be even higher.
Commenting on the inflation, the CBK said that the continuous sharp rise in the prices food would continue until the coming of the short rains but assured Kenyans that all other categories used to calculate inflation would remain stable.
“The committee concluded that overall inflation is expected to remain outside the government target range in the near term due to the elevated food prices, even as demand pressures remain subdued,” said Dr. Njoroge.